Core Insights - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues [1] Group 1 - The article suggests that users may face blocks if they have ad-blockers enabled [1]

Core Insights - McKesson reported revenue of $103.15 billion for the quarter ended September 2025, reflecting a year-over-year increase of 10.1% [1] - The earnings per share (EPS) was $9.86, up from $7.07 in the same quarter last year, resulting in an EPS surprise of +10.54% compared to the consensus estimate of $8.92 [1] Revenue Performance - Prescription Technology Solutions revenue was $1.38 billion, slightly below the average estimate of $1.39 billion, with a year-over-year increase of +8.8% [4] - Medical-Surgical Solutions revenue was $2.95 billion, matching a 0% change year-over-year, but below the estimated $3.02 billion [4] - Oncology & Multispecialty revenue reached $12.04 billion, slightly exceeding the estimate of $12.02 billion [4] - Other revenue was reported at $302 million, surpassing the average estimate of $269 million [4] - North American Pharmaceutical revenue was $86.48 billion, below the estimated $88.02 billion [4] Adjusted Operating Profit - Adjusted Operating Profit for Medical-Surgical Solutions was $249 million, slightly above the estimate of $246.33 million [4] - Adjusted Operating Profit for Prescription Technology Solutions was $261 million, exceeding the estimate of $245.96 million [4] - Adjusted Operating Profit for North American Pharmaceutical was $851 million, significantly above the estimate of $772.24 million [4] - Adjusted Operating Profit for Oncology & Multispecialty was $397 million, above the estimate of $356.64 million [4] - Adjusted Operating Profit for Corporate was reported at -$151 million, better than the estimate of -$166.06 million [4] - Adjusted Operating Profit for Other was $25 million, exceeding the estimate of $13.11 million [4] Stock Performance - McKesson shares have returned +12.2% over the past month, outperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for further outperformance in the near term [3]

Core Insights - McKesson reported quarterly earnings of $9.86 per share, exceeding the Zacks Consensus Estimate of $8.92 per share, and up from $7.07 per share a year ago, representing an earnings surprise of +10.54% [1][2] - The company posted revenues of $103.15 billion for the quarter ended September 2025, which missed the Zacks Consensus Estimate by 1.45%, compared to $93.65 billion in the same quarter last year [2] - McKesson's stock has increased approximately 47.7% year-to-date, significantly outperforming the S&P 500's gain of 15.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $9.99, with expected revenues of $105.75 billion, and for the current fiscal year, the EPS estimate is $38.05 on revenues of $409.17 billion [7] - The estimate revisions trend for McKesson was favorable prior to the earnings release, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Medical - Dental Supplies industry, to which McKesson belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - The performance of McKesson's stock may also be influenced by the overall industry outlook, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - Revenues for Q2 2025 reached $103,150 million, a 10.7% increase from $93,651 million in Q2 2024[9] - Net income attributable to McKesson Corporation for Q2 2025 was $1,110 million, compared to $241 million in Q2 2024, representing a significant increase of 360.6%[9] - Gross profit for the six months ended September 30, 2025, was $6,821 million, up from $6,400 million in the same period last year, reflecting a 6.6% growth[9] - Operating income for Q2 2025 was $1,407 million, a 142.6% increase from $578 million in Q2 2024[9] - Diluted earnings per share for Q2 2025 was $8.92, compared to $1.87 in Q2 2024, marking a 376.5% increase[9] - Comprehensive income for Q2 2025 was $1,100 million, compared to $264 million in Q2 2024, representing a 317.4% increase[11] - For the six months ended September 30, 2025, net income was $1,994 million, compared to $1,247 million for the same period in 2024, representing a 60% increase[20] Assets and Liabilities - Total assets as of September 30, 2025, were $84,160 million, up from $75,140 million as of March 31, 2025, indicating a growth of 12.5%[14] - Current liabilities increased to $68,031 million from $61,604 million, reflecting an increase of 10.4%[14] - Cash and cash equivalents decreased to $4,004 million from $5,691 million, a decline of 29.6%[14] - The company reported a decrease in cash, cash equivalents, and restricted cash of $1,847 million, ending the period with $4,004 million[20] - Total long-term debt increased to $7.76 billion as of September 30, 2025, up from $5.65 billion as of March 31, 2025[94] Dividends and Share Repurchases - The company declared cash dividends of $0.82 per common share for Q2 2025, compared to $0.71 per common share in Q2 2024[16] - Cash dividends declared were $1.53 per common share, totaling $192 million for the period[20] - The Company has authorized a share repurchase plan, with repurchases dependent on various factors including stock price and market conditions[158] - The total number of shares repurchased in Q1 2025 was 0.8 million at an average price of $709.84 per share, and in Q2 2025, 1.2 million shares were repurchased at an average price of $693.25 per share[161] - As of September 30, 2025, the approximate dollar value of shares that may yet be purchased under the repurchase program was $6,070 million[161] Acquisitions and Disposals - The Company acquired an 80% controlling interest in PRISM Vision for $871 million in cash, with a total estimated fair value of consideration at $912 million[35][39] - The Company acquired a 70% controlling interest in Core Ventures for $2.5 billion in cash, with a total estimated fair value of consideration at $3.181 billion[40][44] - The Company completed the sale of its Canadian retail disposal group for a total adjusted purchase price of $129 million, including a cash payment of $9 million and a note of $120 million[46] - The Company recorded net charges of $667 million for the Canadian retail disposal group to remeasure it to fair value less costs to sell[47] - The company entered into a definitive agreement to sell its Norwegian operations during the six months ended September 30, 2025, with the transaction subject to customary closing conditions[184] Segment Performance - The company operates in four reportable segments: North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions, and Medical-Surgical Solutions[22] - North American Pharmaceutical segment revenue increased to $86,481 million for the three months ended September 30, 2025, up from $80,018 million in the same period of 2024, representing a growth of 5.8%[188] - Oncology & Multispecialty segment revenue rose to $12,044 million for the three months ended September 30, 2025, compared to $9,157 million in 2024, marking a significant increase of 31.0%[188] - Prescription Technology Solutions segment revenue was $1,376 million for the three months ended September 30, 2025, a slight increase from $1,265 million in the same period of 2024, reflecting a growth of 8.8%[188] - Medical-Surgical Solutions segment revenue remained stable at $2,947 million for the three months ended September 30, 2025, compared to $2,946 million in 2024[188] Legal and Regulatory Matters - The Company has paid approximately $2.5 billion as of September 30, 2025, under a settlement agreement with 48 states and will pay up to approximately $5.4 billion through 2038[138] - The estimated total litigation liabilities for opioid-related claims as of September 30, 2025, amount to $5.72 billion, down from $6.38 billion as of March 31, 2025[148] - The Company is vigorously defending itself against various claims and legal proceedings related to the distribution of controlled substances[136] - The Company has recorded a liability for opioid-related claims when a loss is probable and reasonably estimable, reflecting ongoing legal uncertainties[135] - The Company is establishing a clearinghouse to consolidate controlled-substance distribution data as part of its settlement efforts[138] Tax and Compliance - Income tax expense for the three months ended September 30, 2025, was $232 million, with a reported income tax rate of 16.6%, compared to $247 million and 46.3% for the same period in 2024[63][65] - The company recognized a discrete tax benefit of $119 million during the three months ended September 30, 2025, related to the release of a valuation allowance in a foreign jurisdiction[65] - The company had $1.6 billion of unrecognized tax benefits as of September 30, 2025, with $1.4 billion potentially reducing income tax expense if recognized[69] - The company maintains compliance with all covenants under its credit facilities as of September 30, 2025[102] Risk Management - The company is exposed to foreign currency exchange rate risks and utilizes foreign currency forward contracts and cross-currency swaps to mitigate these risks[105] - Interest rate risk is managed through the use of interest rate swaps and forward contracts to hedge fluctuations in benchmark interest rates[106] - The fair value of the company's long-term debt as of September 30, 2025, was $7.831 billion, compared to a carrying value of $7.758 billion[129] Other Comprehensive Income - The accumulated other comprehensive loss as of September 30, 2025, was $908 million, reflecting a decrease from $898 million as of June 30, 2025[166] - For the three months ended September 30, 2025, the company recorded other comprehensive income (loss) of $(10) million, including gains of $98 million related to net investment hedges[167]

Financial Data and Key Metrics Changes - Consolidated revenues increased 10% year over year to $103 billion, with adjusted earnings per diluted share rising 39% to $9.86 [5][20][41] - Operating profit reached a record $1.6 billion, up 26% year over year, driven by growth across all operating segments [23][41] - Gross profit increased 9% to $3.5 billion, primarily due to strong specialty distribution and provider growth [22] Business Line Data and Key Metrics Changes - North American pharmaceuticals segment revenues were $86.5 billion, an increase of 8%, with operating profit rising 13% to $851 million [25][41] - Oncology and multi-specialty segment revenues increased 32% to $12 billion, with operating profit up 71% to $397 million, driven by strong provider and specialty distribution growth [27][41] - Prescription technology solutions segment revenues rose 9% to $1.4 billion, with operating profit increasing 20% to $261 million [28][41] - Medical-surgical solutions segment revenues were flat at $2.9 billion, with operating profit increasing 2% to $249 million [29][41] Market Data and Key Metrics Changes - Revenues from GLP-1 medications were $13.2 billion, a 24% increase year over year [26] - The oncology business continues to see good traffic and volumes, benefiting from new partners and complicated oncology-type patients [65] Company Strategy and Development Direction - The company introduced a new reporting structure to enhance transparency and sharpen visibility into growth platforms, focusing on oncology and multi-specialty, and biopharma services [21][34] - The strategy includes significant investments in automation and technology to improve operational efficiency and customer experience [14][15][41] - The company is targeting to exit the medical-surgical solutions business through an initial public offering by the second half of calendar 2027 [17][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business outlook, raising guidance for adjusted earnings per diluted share to a range of $38.35-$38.85, reflecting strong second-quarter performance [5][34] - The company anticipates revenue growth of 11%-15% and operating profit growth of 12%-16% for fiscal 2026 [35][41] - Management highlighted the importance of maintaining discipline in reviewing the portfolio and market decisions [66][67] Other Important Information - The company ended the quarter with $4 billion in cash and cash equivalents, indicating strong liquidity [30] - Free cash flow for the second quarter was $2.2 billion, reflecting disciplined working capital management [30] Q&A Session Summary Question: Understanding revenue growth versus operating profit expansion - Management noted that operating margin expansion was seen across all segments, driven by new products and enhanced programs [44][45] Question: Oncology and multi-specialty segment guidance - Management indicated that strong growth was driven by acquisitions, with organic growth at about 13% year over year [53] Question: Health system business performance - Management expressed satisfaction with the health system business, noting strong volumes and market-leading share [57] Question: Tax rate guidance for the year - Management clarified that the tax rate could vary, with an anticipated range of 18%-19% for the full year [60][61] Question: Impact of cash pay channel on prior authorization business - Management stated that the impact of cash pay channels is expected to be minimal, as the eligible population remains small [76][78] Question: SG&A and gross profit trends - Management attributed the trends to a favorable mix of businesses and continued focus on efficiency [83][84]

Financial Data and Key Metrics Changes - Consolidated revenues increased 10% year-over-year to $103 billion, with adjusted earnings per diluted share rising 39% to $9.86 [5][21][39] - Gross profit increased 9% to $3.5 billion, while operating profit reached a record of $1.6 billion, up 26% year-over-year [22][23] - Interest expense declined 6% to $68 million, and the effective tax rate was 17.5%, down from 21% in the prior year [24][39] Business Line Data and Key Metrics Changes - North American Pharmaceuticals segment revenues were $86.5 billion, an increase of 8%, with operating profit up 13% to $851 million [25][26] - Oncology and Multispecialty segment revenues increased 32% to $12 billion, with operating profit rising 71% to $397 million [26][27] - Prescription Technology Solutions segment revenues increased 9% to $1.4 billion, with operating profit up 20% to $261 million [27] Market Data and Key Metrics Changes - Revenues from GLP-1 medications were $13.2 billion, a 24% increase year-over-year [26] - The company reported strong performance in health systems, benefiting from increased traffic and market-leading share [55] Company Strategy and Development Direction - The company introduced a new reporting structure to enhance transparency and focus on growth areas, specifically in Oncology and Multispecialty segments [6][21] - The strategy includes significant investments in automation and technology to improve operational efficiency and customer experience [14][15][39] - The company is targeting to separate the Medical-Surgical Solutions business through an IPO, expected to be completed by the second half of calendar 2027 [17][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business outlook, raising guidance for adjusted earnings per diluted share to $38.35-$38.85, reflecting strong first-half performance [5][33] - The company anticipates revenue growth of 11%-15% and operating profit growth of 12%-16% for fiscal 2026 [34][39] Other Important Information - The company reported a free cash flow of $2.2 billion for the quarter, with $4 billion in cash and cash equivalents [29][39] - Corporate expenses were flat year-over-year at $151 million, reflecting operational efficiencies [28][39] Q&A Session Summary Question: Understanding revenue growth versus operating profit expansion - Management noted that operating margin expansion was driven by a mix of new products and enhanced programs, particularly in Prescription Technology Solutions [41][42][43] Question: Oncology and Multispecialty guidance maintenance - Management indicated that strong growth was anticipated, with half driven by acquisitions and organic growth at about 13% year-over-year [49][50][51] Question: Health system strength - Management highlighted strong performance in the health system segment, attributing it to market-leading share and increased volumes [54][55] Question: Tax rate guidance - Management clarified that the tax rate for the second half is expected to be slightly higher, with specific guidance for the third quarter at 23%-25% [58][59] Question: Specialty trend continuation - Management confirmed continued good traffic and volumes in oncology, with a focus on treating more complicated patients [62][63] Question: Cash pay channel impact - Management expressed that the impact of cash pay channels on the prior authorization business is expected to be minimal, emphasizing their commitment to work with policymakers [72][75][76]

Financial Data and Key Metrics Changes - Consolidated revenues increased 10% year over year to $103 billion, with adjusted earnings per diluted share rising 39% to $9.86 [4][18][23] - Operating profit reached a record $1.6 billion, up 26% year-over-year, driven by growth across all operating segments [21][38] - Interest expense declined 6% to $68 million, and the effective tax rate was 17.5%, down from 21% in the prior year [22][23] Business Line Data and Key Metrics Changes - North American pharmaceuticals segment revenues were $86.5 billion, an increase of 8%, with operating profit increasing 13% to $851 million [23][24] - Oncology and multi-specialty segment revenues rose 32% to $12 billion, with operating profit increasing 71% to $397 million [24][25] - Prescription technology solutions segment revenues increased 9% to $1.4 billion, with operating profit rising 20% to $261 million [25] Market Data and Key Metrics Changes - Revenues from GLP-1 medications were $13.2 billion, a 24% increase year-over-year [24] - The oncology and multi-specialty segment's growth was supported by expanded distribution and contributions from recent acquisitions [19][24] Company Strategy and Development Direction - The company introduced a new reporting structure to enhance transparency and sharpen strategic alignment, focusing on oncology and multi-specialty segments [5][18] - The strategy includes significant investments in automation and technology to improve operational efficiency and customer experience [13][14][38] - The company is targeting to separate the medical-surgical solutions business through an initial public offering, expected to be completed by the second half of calendar 2027 [15][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business outlook, raising the guidance for adjusted earnings per diluted share to $38.35-$38.85, reflecting strong second-quarter performance [4][31] - The company anticipates revenue growth of 11%-15% and operating profit growth of 12%-16% for fiscal 2026 [32][38] - Management highlighted the importance of maintaining operational discipline and strategic focus to drive long-term value creation [18][29] Other Important Information - The company ended the quarter with $4 billion in cash and cash equivalents, indicating strong liquidity [28] - Free cash flow for the second quarter was $2.2 billion, with $907 million returned to shareholders through share repurchases and dividends [28][38] Q&A Session Summary Question: Understanding revenue growth versus operating profit expansion - Management noted that operating margin expansion was seen across all segments, driven by a mix of new products and access programs [40][41] Question: Oncology and multi-specialty segment guidance - Management indicated that strong growth was anticipated, with half driven by acquisitions and organic growth at about 13% year-over-year [44][45] Question: Health system business performance - Management expressed satisfaction with the health system business, noting strong volume growth and market-leading share [46] Question: Tax rate guidance for the year - Management clarified that the tax rate for the second half is expected to be slightly higher, with specific guidance for the third quarter at 23%-25% [48] Question: Specialty trend expectations - Management confirmed continued good traffic and volumes in oncology, supported by new partners and complex therapies [49][50] Question: Impact of cash pay channel on prior authorization business - Management stated that the cash pay channel's impact is expected to be minimal, as the eligible population remains small [53][55] Question: SG&A and gross profit trends - Management highlighted the favorable mix of businesses and continued focus on efficiency as key drivers of the observed trends [56][58] Question: Market decisions and gains - Management clarified that the gains from market decisions were non-recurring and included in the reported figures [59][62] Question: Drug Supply Chain Security Act impact - Management noted that the implementation was smooth and added value to services, but it is not expected to be a material driver of growth [63]

Core Insights - McKesson raised its fiscal 2026 profit forecast, indicating confidence in its growth prospects [1] Company Summary - The company is focusing on strong growth in its oncology and specialty drug distribution businesses, which are expected to drive profitability [1]

McKesson Corporation Second Quarter Fiscal 2026 Earnings Call November 5, 2025 1 © 2021 McKesson Corporation. All rights reserved. Cautionary Statements Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward- looking statements may be identified by their use of terminology such as "believes," "expects," "anticipates," "may," "will," "should," "seeks," "approxim ...

Financial Performance - McKesson reported record revenue of $103.2 billion for the second quarter, a 10% increase compared to the prior year[2]. - Adjusted Earnings per Diluted Share increased by 39% to $9.86, up from $7.07 in the previous year[8]. - The company raised its fiscal 2026 Adjusted Earnings per Diluted Share guidance by $0.30 to a range of $38.35 to $38.85, indicating 16% to 18% growth compared to the prior year[5][15]. - Net income attributable to McKesson Corporation for the second quarter was $1.11 billion, a significant increase from $241 million in the prior year[4]. - Revenues for the three months ended September 30, 2025, were $103,150 million, a 10% increase from $93,651 million in the same period of 2024[28]. - Net income attributable to McKesson Corporation for the three months ended September 30, 2025, was $1,110 million, representing a 361% increase compared to $241 million in the prior year[30]. - Diluted earnings per share for the three months ended September 30, 2025, reached $8.92, a 377% increase from $1.87 in the same quarter of 2024[30]. - Adjusted earnings (Non-GAAP) for the three months ended September 30, 2025, were $1,227 million, a 34% increase from $915 million in the same period of 2024[30]. - Total revenues for the six months ended September 30, 2025, were $200,977 million, a 16% increase from $172,934 million in the same period of 2024[37]. - Net income for the six months ended September 30, 2025, was $1,994 million, a 60% increase from $1,247 million in the same period of 2024[42]. Cash Flow and Investments - Cash flow from operations for the quarter was $2.4 billion, resulting in Free Cash Flow of $2.2 billion after capital expenditures of $196 million[9]. - Net cash provided by operating activities increased by 109% to $2,420 million for the three months ended September 30, 2025, compared to $720 million for the same period in 2024[44]. - Free Cash Flow (Non-GAAP) for the six months ended September 30, 2025, was $2,224 million, representing a 233% increase from $335 million in the same period of 2024[44]. - Net cash used in investing activities was $3,588 million for the six months ended September 30, 2025, compared to $373 million in the same period of 2024, indicating a significant increase in investment activity[44]. - The company reported a net decrease in cash, cash equivalents, and restricted cash of $1,847 million for the six months ended September 30, 2025, compared to a decrease of $2,074 million in the same period of 2024[44]. - Cash and cash equivalents at the end of the period were $4,004 million for the six months ended September 30, 2025, up from $2,509 million in the same period of 2024[42]. Segment Performance - The North American Pharmaceutical segment revenues reached $86.5 billion, an 8% increase driven by higher prescription transaction volumes[13]. - The Oncology & Multispecialty segment revenues grew by 32% to $12.0 billion, supported by increased provider and specialty distribution growth[13]. - North American Pharmaceutical segment revenues increased by 8% to $86,481 million from $80,018 million year-over-year[35]. - Operating profit for the North American Pharmaceutical segment rose by 146% to $852 million compared to $347 million in the prior year[35]. - The company reported an operating profit margin of 0.99% for the North American Pharmaceutical segment, up from 0.43%[35]. Shareholder Returns - The company returned $1.6 billion to shareholders in the first six months, including $1.4 billion in stock repurchases[10]. - The company declared dividends of $0.82 per common share, a 15% increase from $0.71 in the same quarter of 2024[28]. Strategic Initiatives - McKesson's strategic focus on oncology and multispecialty services continues to drive sustainable long-term growth[3]. - The company announced a definitive agreement to sell its retail and distribution businesses in Norway, subject to customary closing conditions[13]. Financial Adjustments and Non-GAAP Measures - Free Cash Flow (Non-GAAP) is defined as net cash from operating activities minus payments for property, plant, and equipment, with reconciliations provided in financial statements[59]. - The company believes Non-GAAP measures provide useful supplemental information for assessing operating performance and comparing financial results with industry peers[61]. - Management uses both GAAP and Non-GAAP measures for financial planning, resource allocation, and assessing business performance[62]. - Non-GAAP adjusted results should not be viewed as a substitute for GAAP financial results[62]. Liabilities and Restructuring - Total liabilities related to litigation increased by $657 million for the six months ended September 30, 2025, compared to $386 million in the same period of 2024[42]. - The company incurred pre-tax restructuring, impairment, and related charges of $110 million for the six months ended September 30, 2025, compared to $244 million in the same period of 2024[48]. - The company incurs restructuring charges related to operational changes, including employee severance and facility closure costs, which are not part of its underlying business[56].